Facilitating preparation of Ukrainian industrial policy: achievements, issues and lessons Prof. Slavo Radosevic s.radosevic@ucl.ac.uk GIZ Webinar 13th November 2018

Outline: Timeline and organisation of activities Achievements Issues and challenges Lessons Annex: An Outline of the Strategy of Development of the Industrial Complex of Ukraine for the period until 2025 (Draft March 2018) Supporting background analyses and methodologies produced as part of preparatory work on Ukrainian IP strategy

Timeline of activities Kick-Off Meeting for the Preparation of a National Industrial Policy Strategy, 16th June 2017 Steering Committee Meeting, 21st August 2017 First expert group meeting, September (preceded by EquIP three day training) Second Expert group meeting, 17-19 October 2017 (preceded by EquIP three day training) First Core Drafting Group Meeting for the Preparation of a National Industrial Policy Strategy 30th November Second Core Group Meeting 1st December 2017 Draft Strategy as of March 2018 (but not yet action plan)

Steering Committee on the Strategy for Industrial Development and Action Plan MEDT MinRegion MinInfrastr MinFin MinEducat MinEnergy MinAgrarian SAGSUR NatCom IndDevelopment Reforms Office Investment Office Appoints and steers Expert Groups on Strategy for Industrial Development and Action Plan – see next slide

Expert Groups on Strategy for Industrial Development and Action Plan MEDT Core Drafting Group EQuIP Expert Group Impact Assessment Diagnosis Policy Instruments Institutional Set-Up Core Drafting Group: MEDT representatives, MEDT Adviser, International Experts from GIZ Expert Group: Members are appointed by Steering Committee members

Achievements: Significantly improved methodological quality of Strategy document (see outline of Strategy): Empirically grounded analysis Prioritisation of intervention areas Consistency between objectives and intervention areas Portfolio of potential policy instruments to addres A high ‘absorptive capacity’ of local expert group and build up of analytical capacities for industrial policy analysis

Issues: Very limited participation of stakeholders especially from private sector Limited broader (ie beyond narrow confines of local expert group) technical, operational and political capabilities (TOP) for design and especially implementation of industrial policy Implementation issues not yet address (cf. action plan) Uncertain and limited budget for implementation The issues of administrative implementation capacities not yet addressed

Lessons Consider whether there is sufficient political and resource commitment for EquIP approach (the full implementation of EquIP requires either developed TOP capacities or ambition to develop them) In the absence of (1) apply EquIP selectively ie. focus on specific issues and areas of interventions. For further guides see section ‘Adjusting EQuIP when resources and commitment are limited’ in EQUIP AND CHALLENGES OF ITS USE IN SUSTAINABLE ECONOMIC DEVELOPMENT PROJECTS OF GIZ,Note By Slavo Radosevic In applying (2) focus on industrial policy as process and on specific actions instead focusing solely on Strategy as document Application of (3) requires in depth understanding of the institutional context and TOP capacities for IP > ex ante assessment and involvement of external experts to facilitate the process Allow for bottom up approaches (complementary to EquIP top down logic) by enhancing the existing or building ‘islands of policy and organisational excellence’ (cf agencies, departments, programs)

An Outline of the Strategy of Development of the Industrial Complex of Ukraine for the period until 2025 (Draft March 2018) General provisions ІІ. Industrial policy in the context of the national development of Ukraine Goal ‘Sustainable economic development” Goal “Prosperity growth and social stability” Goal “Improvement of national security” ІІІ. Key industrial development problems De-industrialisation of the economy Lack of skilled workforce for the industry Critical dependence on the export of raw materials Dominance of industrial sectors with a low added value High volume of the import of industrial goods High geographical concentration of industrial exports High regional concentration of the industry Low resource efficiency of the industry and high pollution IV. Goal and duration of the Strategy

V. Objectives of the Strategy Strategic objective 1. Modernisation and growth of industrial production 1.1. Development of existing and creation of new types of activity with a higher added value 1.2. Increase of productivity and the volume of industrial production 1.3. Improvement of methods of economic business management 1.4. Integration into global production chains Strategic objective 2. Regional industrial development 2.1. Increase of industrial production and processing volumes, especially in underdeveloped regions 2.2. Strengthening regional production chains Strategic objective 3. Increase of the resource efficiency of industry 3.1. Resource efficiency 3.2. Implementation of efficient practices for waste management

VI. Areas of the Strategy implementation Modernisation and growth of industrial production Attraction of foreign and domestic investments for industry Simplification of industrial activities (effective regulation) Reform of the technical regulation, standardisation and metrology system Creation of conditions for the development of competition in the industrial sector Improvement of the system of public-private partnership in industry Vocational training in line with the needs of industry Promotion of the digitisation of industry Regional industrial development Implementation of the industrial policy taking into account the economic and innovative specialisation of regions Development of cluster cooperation in the industry Dissemination of modern organisational forms for the support of business projects and innovation in the industrial sector Development of the infrastructure according to the needs of industry taking into account regional specifics Simplifying access to raw materials and ensuring their deeper processing Improving the resource efficiency of industry Awareness raising for companies regarding available resource-efficient technologies Promoting innovations and simplifying access to investments for resource-saving technologies Implementation of efficient regulation in resource saving and use of renewable energy Implementation of efficient practices in waste management and the principles of circular economy

Cont VII. Financial back-up for the Strategy implementation (?) VIII. Organisational support and mechanism of the Strategy implementation (?) ІХ. Expected results

Unfinished analysis of the existing industrial policy instruments: Supporting background analyses and methodologies produced as part of preparatory work on Ukrainian IP strategy Completed: Preliminary assessment of current (implicit) industrial policy of Ukraine: Note by S. Radosevic The role of policy impact assessment (PIA) in preparing Ukrainian industrial policy strategy: Note by S. Radosevic Assessing the capacity for implementation of industrial policy: Note by S. Radosevic Institutional Self-Assessment for Instrument Selection: Note by Amanda Janoo Not completed Unfinished analysis of the existing industrial policy instruments: Instrument (name); Implementing Institution; Responsible Person; Related Intervention Area(s); Target Groups; Description of Instrument; Expected Impact of Instrument; Timeframe for implementation; Budget; Funding Source Institutional Self-Assessment for Instrument Selection

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